NON-BINDING GUIDANCE ON METHODOLOGIES

FOR MEASURING EMBEDDED EMISSIONS

COMMUNICATION FROM AUSTRALIA, JAPAN, THE REPUBLIC OF KOREA

Revision

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 1  BACKGROUND AND GENERAL CONSIDERATIONS

1.1.  The WTO Committee on Trade and Environment (CTE) was established by the General Council on 31 January 1995 in accordance with the Ministerial Decision on Trade and Environment adopted in Marrakesh on 15 April 1994. It aims, inter alia, to identify the relationship between trade measures and environmental measures, in order to promote sustainable development.

1.2.  Recently, with Members adopting or considering an increasing number of measures pursuing climate objectives which have an impact on trade[1] (hereinafter referred to as "relevant measures"), the CTE has held three thematic sessions specifically covering this topic since 2024. This included two that were dedicated solely to this issue. In these sessions as well as in regular and informal sessions of the CTE, Members shared the need to discuss, among other things, technical issues related to relevant measures on a pragmatic basis, to avoid unnecessary impediments to trade and to take into account challenges faced by small and medium-sized enterprises and developing and least-developed country Members.

1.3.  Based on discussions in the CTE, this guidance focuses on methodologies for measuring embedded emissions, which was identified as an area where Members could cooperate to avoid the fragmentation linked to proliferation of relevant measures and promote their mutual interoperability. This non-binding, non-exhaustive, and non-prescriptive practical guidance provides key guiding frameworks and good practices, to which Members may wish to refer.[2]

1.4.  This guidance is intended to enhance transparency, foster cooperation between WTO Members and thereby facilitate trade and investment, promote good communication between different regulatory systems and regulatory bodies, and contribute to sustainable development, including economic growth.

1.5.  Nothing in this guidance should be construed to add to or detract from the rights and obligations of Members under any WTO agreement. Furthermore, this guidance does not serve to either acknowledge or deny the consistency of any specific measures with obligations under the WTO Agreements or the legitimacy thereof.

1.6.  This guidance may be reviewed and updated by Members as appropriate at the CTE.

2  GOOD PRACTICES RELATED TO METHODOLOGIES FOR MEASURING EMBEDDED EMISSIONS

2.1.  Members putting in place requirements for measuring embedded emissions of goods traded across borders[3] (hereinafter referred to as "implementing Members") are encouraged to consider the following.

a._         Basing their measurement methodologies on relevant international standards, such as ISO, where available, except when such international standards or relevant parts of them would be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued.

b._         When identifying requirements for measuring embedded emissions, avoiding excessive regulatory burdens and costs on businesses, in particular those with limited resources such as small and medium-sized enterprises, including those from developing and least‑developed country Members, to secure open trade, while pursuing climate goals.

c._         Clearly disclosing methodologies, data sources and assumptions, as appropriate.

2.2.  In particular, in order to reduce burdens of measuring embedded emissions without undermining the environmental purpose and outcomes of relevant measures, implementing Members could consider adopting good practices such as the following:

a._         Setting de minimis thresholds to exempt small-volume transactions from the relevant measures when defining their scope of application.

b._         Allowing for the use of default values, as an alternative to the use of actual measured emissions, where obtaining granular emissions data is impractical or excessively burdensome, and developing these values in consultation with Members affected by the relevant measures in a way that balances environmental objectives with the need to find operational measurement means.

c._         Ensuring appropriate protection of confidential business information of exporters, including by only requiring data necessary for the purpose of verifying embedded emissions or exchanging information by using methods that maintain confidentiality.

d._         Establishing reasonable, smooth and robust mechanisms to report and verify embedded emissions.

3  COOPERATION ON MEASURING EMBEDDED EMISSIONS, INCLUDING THE DEVELOPMENT DIMENSION

3.1.  When introducing new relevant measures, implementing Members are encouraged to strengthen cooperation with other Members and take into account the development dimension by considering the following:

a._         Providing sufficient explanation and opportunities for consultation with Members and industries affected by the relevant measures during their development.

b._         Promoting technical cooperation to facilitate efforts to adopt or apply measurement methodologies in affected trading partners and businesses, including through capacity building.

3.2.  Members recognize that Members at different levels of development face different challenges and have different needs, concerns, and capacities. Members should endeavor to inform other members, especially developing and least-developed country Members, of relevant measures adopted and provide them with technical assistance as appropriate.

3.3.  Members should continue to discuss the relationship between requirements for measuring embedded emissions and WTO Agreements in the relevant bodies including the CTE.

4  ENHANCING TRANSPARENCY OF SECTOR-SPECIFIC MEASUREMENT METHODOLOGIES FOR EMBEDDED EMISSIONS

4.1.  Transparency is a pre-requisite for mutual understanding and cooperation at the WTO. When implementing Members adopt measurement methodologies for embedded emissions in specific sectors or goods, they are encouraged to share information on the relevant measures with Members through the CTE, using the tables provided in the "Attachment" as a guide. This could include information on how the measures relate to the elements in this guidance.

4.2.  The timing for sharing such information will depend on Members' specific circumstances. Implementing Members could, if they wish, share information multiple times, for example in two phases: once when the broad framework of the relevant measures have been identified, and again when the details have become sufficiently clear and concrete.

4.3.  The information provided by implementing Members in accordance with 4.1 on measurement methodologies and the basis for their understanding of the relationship with this guidance will contribute to the enhancement of transparency of measures, the aggregation of good practices, and the convergence of internationally recognized methodologies for measuring embedded emissions.